Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022-005 Federal Program Title ? COVID-19 - Education Stabilization Fund - Higher Education Emergency Relief Fund ? Institutional Portion Assistance Listing No. ? 84.425F Federal Agency ? U.S. Department of Education ? Direct Program Federal Award Number ? Not applicable Grant Award Period ? April 22, 2020 through January 17, 2022 Compliance Requirement ? Reporting Criteria: As set forth in 34 CFR 75.720(b), all HEERF grantees must submit a Higher Education Emergency Relief Fund (HEERF) Annual Report. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure the HEERF Annual Report was reviewed by someone other than the preparer for completeness and accuracy prior to submission to the U.S. Department of Education. Questioned Cost: There are no questioned costs. Cause and Effect: The University did not have an effective system of internal control to ensure the required Annual Report submitted to the U.S. Department of Education was reviewed by someone other than the preparer for completeness and accuracy. The lack of a review by someone other than the preparer could result in information being reported that is materially inaccurate or incomplete. Repeat Finding: A similar finding regarding internal control was reported in prior year audits as finding numbers 2020-001 and 2021-005. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure the required reports are reviewed by someone other than the preparer for completeness and accuracy prior to being submitted to the U.S. Department of Education.
Finding 2022-005 Federal Program Title ? COVID-19 - Education Stabilization Fund - Higher Education Emergency Relief Fund ? Institutional Portion Assistance Listing No. ? 84.425F Federal Agency ? U.S. Department of Education ? Direct Program Federal Award Number ? Not applicable Grant Award Period ? April 22, 2020 through January 17, 2022 Compliance Requirement ? Reporting Criteria: As set forth in 34 CFR 75.720(b), all HEERF grantees must submit a Higher Education Emergency Relief Fund (HEERF) Annual Report. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure the HEERF Annual Report was reviewed by someone other than the preparer for completeness and accuracy prior to submission to the U.S. Department of Education. Questioned Cost: There are no questioned costs. Cause and Effect: The University did not have an effective system of internal control to ensure the required Annual Report submitted to the U.S. Department of Education was reviewed by someone other than the preparer for completeness and accuracy. The lack of a review by someone other than the preparer could result in information being reported that is materially inaccurate or incomplete. Repeat Finding: A similar finding regarding internal control was reported in prior year audits as finding numbers 2020-001 and 2021-005. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure the required reports are reviewed by someone other than the preparer for completeness and accuracy prior to being submitted to the U.S. Department of Education.
Finding 2022-005 Federal Program Title ? COVID-19 - Education Stabilization Fund - Higher Education Emergency Relief Fund ? Institutional Portion Assistance Listing No. ? 84.425F Federal Agency ? U.S. Department of Education ? Direct Program Federal Award Number ? Not applicable Grant Award Period ? April 22, 2020 through January 17, 2022 Compliance Requirement ? Reporting Criteria: As set forth in 34 CFR 75.720(b), all HEERF grantees must submit a Higher Education Emergency Relief Fund (HEERF) Annual Report. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure the HEERF Annual Report was reviewed by someone other than the preparer for completeness and accuracy prior to submission to the U.S. Department of Education. Questioned Cost: There are no questioned costs. Cause and Effect: The University did not have an effective system of internal control to ensure the required Annual Report submitted to the U.S. Department of Education was reviewed by someone other than the preparer for completeness and accuracy. The lack of a review by someone other than the preparer could result in information being reported that is materially inaccurate or incomplete. Repeat Finding: A similar finding regarding internal control was reported in prior year audits as finding numbers 2020-001 and 2021-005. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure the required reports are reviewed by someone other than the preparer for completeness and accuracy prior to being submitted to the U.S. Department of Education.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 012 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Number ? 1 U3SHS42192-01-00 Grant Award Period ? June 1, 2021 to August 31, 2022 Compliance Requirement ? Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, referred as the ?Transparency Act? that are codified in 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure that all required reports were submitted. While performing testwork over FFATA reporting for four of seven subrecipients, it was identified that FFATA reporting was not completed during fiscal year 2022 for two of the eight first tier subawards of $30,000 or more. See Schedule of Findings and Questioned Costs for chart/table Questioned Costs: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of a management review control that operated effectively over FFATA reporting for subawards greater than $30,000 contributed to the noncompliance with the Reporting compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University submit the 2 additional required FFATA reports. Additionally, we recommend the University strengthen its processes and internal controls to ensure the University has both preventive and detective internal controls in place to ensure that reports for first tier subawards of $30,000 or more are reported to the FSRS as required.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 012 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Number ? 1 U3SHS42192-01-00 Grant Award Period ? June 1, 2021 to August 31, 2022 Compliance Requirement ? Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, referred as the ?Transparency Act? that are codified in 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure that all required reports were submitted. While performing testwork over FFATA reporting for four of seven subrecipients, it was identified that FFATA reporting was not completed during fiscal year 2022 for two of the eight first tier subawards of $30,000 or more. See Schedule of Findings and Questioned Costs for chart/table Questioned Costs: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of a management review control that operated effectively over FFATA reporting for subawards greater than $30,000 contributed to the noncompliance with the Reporting compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University submit the 2 additional required FFATA reports. Additionally, we recommend the University strengthen its processes and internal controls to ensure the University has both preventive and detective internal controls in place to ensure that reports for first tier subawards of $30,000 or more are reported to the FSRS as required.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 012 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Number ? 1 U3SHS42192-01-00 Grant Award Period ? June 1, 2021 to August 31, 2022 Compliance Requirement ? Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, referred as the ?Transparency Act? that are codified in 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure that all required reports were submitted. While performing testwork over FFATA reporting for four of seven subrecipients, it was identified that FFATA reporting was not completed during fiscal year 2022 for two of the eight first tier subawards of $30,000 or more. See Schedule of Findings and Questioned Costs for chart/table Questioned Costs: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of a management review control that operated effectively over FFATA reporting for subawards greater than $30,000 contributed to the noncompliance with the Reporting compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University submit the 2 additional required FFATA reports. Additionally, we recommend the University strengthen its processes and internal controls to ensure the University has both preventive and detective internal controls in place to ensure that reports for first tier subawards of $30,000 or more are reported to the FSRS as required.
Finding 2022 006 Federal Program Title ? COVID-19 ? Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing No. ? 93.498 Federal Agencies ? U.S. Department of Health and Human Services Federal Award Number ? Not applicable Grant Award Period ? January 1, 2020 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Under the terms and conditions of the award, Provider Relief Funds (PRF) is subject to 45 CFR Section 75.302 (Financial management and standards for financial management systems). The PRF program requires special reporting through the Provider Relief Fund Reporting Portal and the PRF period 3 report contains key line items. Key line items, when calculating lost revenues based on 2019 actuals, consist of the following which are required to be completely and accurately reported: 1) Total revenue/net charges for each quarter; and 2) Each cell by payer for each quarter (i.e., Medicare A+B, Medicare C, Children?s Health Insurance Program/CHIP, Commercial Insurance, Self-Pay, and Other). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: During our testing for the reporting compliance requirement, the following conditions were identified: ? Total revenue/net charges from patient care attributable to quarter two (Q2) 2021 actuals for Self-Pay (No Insurance) was understated by $2,000,000. Total revenue/net charges from patient care attributable to Q2 2021 actuals for Self-Pay (No Insurance) per the PRF period 3 report noted $3,758,128 and the supporting documentation provided by the University reported $5,758,128. This $2,000,000 error occurred in a quarter that did not result in lost revenue. ? The period 3 report which included actuals for calendar years 2019 through 2021, reported $6,754,185 as Commercial Insurance which included "Charge Corrections" made by the University. The Charge Corrections represented corrections made across all payer categories but the entire amount was reported within Commercial Insurance. As a result, the amounts reported for the Commercial Insurance payer category was overstated for each of the quarters in calendar years 2019 through 2021 and all other payer categories were understated for each of the quarters. ? For Q3 2021 and Q4 2021, the PRF period 3 report included allocations of "Charge Corrections" and a reclassification made by the University in the amount of $6,177,240. The Charge Corrections and the reclassification impacted three payer categories: Medicaid/Children?s Health Insurance Program of $4,533,665; Medicare A+B of $1,000,000; and Other of $643,575. ? For Q1 2022 and Q2 2022, the PRF period 3 report included $61,431 for the Commercial Insurance payer category than what was supported by the detail and the Other payer category included $61,431 less than what was supported by the detail. The University did not have an effective system of internal control in place to ensure that key line items within the PRF period 3 report were complete and accurate. Questioned Cost: There are no questioned costs as the University had excess lost revenues greater than their period 3 PRF award. Cause and Effect: In discussing these conditions with University management, they stated that an effective system of internal controls to ensure the completeness and accuracy of amounts reported within the period 3 PRF report did not exist and resulted in certain key line items as listed above being inaccurate. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place that includes a review of all amounts, including all key line items, allocations and reclassifications within the PRF report to determine completeness and accuracy before submission into the portal.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 007 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ?P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Eligibility Criteria: In accordance with 34 CFR 685.203(a) and (b), for dependent undergraduate students (excluding dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $5,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $6,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $7,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.203(a) and (c), for independent undergraduate students (including dependent undergraduates whose parents are unable to borrow Direct PLUS Loans), the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual limits are: $9,500 for dependent first-year undergraduates, not more than $3,500 of which may be subsidized; $10,500 for dependent second-year undergraduates, not more than $4,500 of which may be subsidized; $12,500 for dependent third-, fourth-, and fifth-year undergraduates, not more than $5,500 of which may be subsidized. Additionally, in accordance with 34 CFR 685.301(a)(4), a school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan or a combination of loans, for an amount that exceeds the student?s estimated cost of attendance less the student?s estimated financial assistance for that period and in the case of a Direct Subsidized Loan, the borrower?s expected family contribution for that period. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure amounts disbursed to students were properly determined. While performing procedures related to financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), we found that for two disbursements sampled, the incorrect grade-level was utilized to calculate the students award limits resulting in Direct Subsidized Loans disbursed (total of $6,271 and $6,234 Direct Loans was disbursed) which exceeded the set limit by $1,942 and $953, for a total over award of $2,895. Additionally, while performing procedures over financial aid disbursements made to sixty-one students (with disbursements sampled totaling $1,110,440), specifically over cost of attendance, we identified eight students sampled where the cost of attendance per the student?s records was overstated which resulted in the following: ? For four students sampled, clerical errors within the students cost of attendance records were identified resulting in one student being over awarded $25 of Direct PLUS Loans (a total of $17,088 of Direct Loans was disbursed). Three students with clerical errors did not result in an over award status because the student awards were less than the amount of the original cost of attendance. ? For four students sampled, the student?s status was incorrectly defaulting to full-time when each should have been identified as `part-time? which resulted in two students having Direct Unsubsidized Loans being over awarded in the amounts of $3,200 and $452 ($9,401 of Direct Loans was disbursed for each of the two students) and one student having Direct Subsidized and Unsubsidized ($11,094 of Direct Loans was disbursed), being over awarded in the amount of $5,912 (note this sample also had the incorrect grade-level discussed above which additionally contributed to the over award). One student sampled with the incorrect student status did not result in an over award status because amounts of loans secured were less than the annual loan limits and part-time cost of attendance. Questioned Cost: $12,484 Cause and Effect: In discussing these conditions with University management, they stated that: 1) clerical errors occurred related to manual cost of attendance adjustments; 2) grade-level data with their student system incorrectly populating from the FAFSA on certain students who had missing grade levels; and 3) student status? incorrectly defaulting on summer students enrolled in a certificate program. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process related to eligibility and consider implementing management review controls when the cost of attendance is manually adjusted to have someone other than the preparer review the accuracy of the data entered. We also recommend the University consider whether configuring and generating additional routine exception reports could inform management of discrepancies that would detect errors which impact eligibility determinations.
Finding 2022 008 Federal Program Title ? Student Financial Assistance Cluster ? Federal Pell Grant Program Assistance Listing No. ? 84.063 Federal Agency ? U.S. Department of Education Federal Award Number ?P063Q211755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Per OMB No. 1845-0039, an institution is required to submit Pell Loan disbursement records to the Common Origination and Disbursement (COD). The disbursement record reports the actual disbursement date and the amount of the disbursement. In accordance with Chapter 2 of the Federal Student Aid Handbook, an institution must submit Pell Grant disbursement records to the COD no later than 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure Pell Grant disbursement records are submitted to the COD no later than 15 days after making the disbursement. We noted two of sixty samples where the University submitted the Pell Grant disbursement records to the COD 34 and 80 days of disbursement which was not within the 15 day requirement. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in reporting disbursement record reports to the COD later than the 15 day requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure Pell Grant disbursement records are submitted to COD no later than 15 days after making the disbursement.
Finding 2022 009 Federal Program Title ? Student Financial Assistance Cluster ? Federal Direct Student Loans Assistance Listing No. ? 84.268 Federal Agency ? U.S. Department of Education Federal Award Number ? P268K221755 Grant Award Period ? July 1, 2021 to June 30, 2022 Compliance Requirement ? Special Tests and Provisions - Disbursements To or On Behalf of Students Criteria: In accordance with 34 CFR 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent, no earlier than 30 days before the disbursement and no later than 30 days after the disbursement, in writing of the anticipated date and amount of the loan disbursement, the student?s right or parent?s right to cancel all or a portion of the loan or loan disbursement and have the loan proceeds returned to the holder of that loan, and the procedures and time in which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the special tests and provisions ? disbursements to or on behalf of students, we selected sixty-one students and identified twenty-two exceptions as follows: ? For nine of the sixty-one students selected for testwork, the University did not send the required notification to the student or parent for ten disbursements. ? For thirteen of the sixty-one students selected for testwork, the University did not maintain sufficient supporting documentation to evidence the University sent the required notification to the student or parent within 30 days after the disbursement for thirteen disbursements. The University did not have an effective system of internal control in place to notify the student, or parent, in writing of the date and amount of Direct Loan disbursement, the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan. Additionally, the University did not have an effective system of internal control in place to ensure adequate records were maintained to evidence that Direct Loan disbursement notifications were sent to student?s or parents. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that employee turnover and the re-distribution of responsibilities to balance workloads for six months of the fiscal year resulted in noncompliance with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen processes and internal controls to ensure the University complies with the Special Tests and Provisions - Disbursements To or On Behalf of Students compliance requirement, including sending the required notification to the student or parent within 30 days after disbursement and maintaining adequate supporting documentation. Additionally, we recommend the University consider whether configuration of additional exception reports would help prevent or detect noncompliance.
Finding 2022-010 Federal Program Title ? Student Financial Assistance Cluster ? Federal Perkins Loan Program Assistance Listing No. ? 84.038 Federal Agency ? U.S. Department of Education Federal Award Number ? Not applicable Grant Award Period ? Not applicable Compliance Requirement ? Special Tests and Provisions ? Perkins Loan Recordkeeping and Record Retention Criteria: According to 34 CFR 674.19(e), institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made. Disbursement records, electronic authentication and signature records for loans made with an MPN, must also be retained by the institution. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party servicer is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicers most recent Title IV compliance audit. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure appropriate due diligence was documented regarding the third-party servicers most recent Title IV compliance. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of policies that require documentation of the review of the third-party servicer compliance report was the cause. The lack of appropriate due diligence could result in recordkeeping and record retention issues at the third-party being undetected by the University. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its current processes and its internal controls to ensure appropriate due diligence is being performed and documented by a control operator that is knowledgeable of the Title IV requirements and the functions being performed by the third-party servicer on behalf of the University.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022 001 Federal Program Title ? Research & Development Cluster (R&D) Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Also, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University?s `Effort Reporting Policy? states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Additionally, as set forth in 2 CFR 200, the University is required to ensure allowable costs do not consist of improper payments, including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments). Indirect costs are required to adhere to 2 CFR 200, Appendix III. Further, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing procedures related to personnel expenses, we noted the University had not followed their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our sixty sampled effort reports that had not been returned within the 30-calendar day policy. Total payroll and fringe totaled approximately $13,200,000 during fiscal year 2022. While performing procedures related to indirect costs, we noted three of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges during the University?s fiscal year ended June 30, 2022 for a total overstatement of $1,888 as noted below: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted indirect costs were overcharged for two of forty sampled grants (totaling $3,385,750) where transactions were originally recorded to an incorrect object class during the University?s fiscal year ended June 30, 2021 that resulted in F&A being applied to the grant instead of to the correct object class which resulted in overcharges. These overstatements were corrected during the University?s fiscal year ended June 30, 2022 for a total of $18,377 as noted below: See Schedule of Findings and Questioned Costs for chart/table Total indirect costs during fiscal year 2022 totaled approximately $8,360,000. While performing procedures related to cost transfers, we noted the University had not followed their `Cost Transfer Policy? which states ?Cost transfers for current transactions must occur on a timely basis?. The University?s cost transfer policy defines timely as ?occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)?. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted thirty-two of our sixty-seven sampled cost transfers (totaling $3,153,441 positive and $2,900,348 negative) where the cost transfer date was between 91 and 581 days past the date the original expenditure was incurred (21 were between 91 and 180 days past, 6 were between 181 and 270 days past, and 5 were greater than 271 days past). While testing cost transfers, we noted the following exceptions: We noted a transaction which was originally recorded to an incorrect object class that resulted in F&A being applied to the grant instead of to the correct object class that did not allow F&A costs to be applied: See Schedule of Findings and Questioned Costs for chart/table Additionally, we noted a transaction recorded to a grant that exceeded the amount of the award resulting in the costs being unallowable to the grant: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers were approximately $4,060,000 and negative cost transfers were $3,510,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2022, they continued reconciliation procedures related to `grant level? activity as a result of implementing the grants module of Workday in the previous fiscal year. Grant level activity allows them to track the specific budget provided by the individual R&D Cluster agreement as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at its processes, policies and internal controls to determine what is needed, post Workday implementation, to prevent and detect noncompliance with activities allowed and unallowed and adherence to allowable cost principles/cost principles. Additionally, we recommend the University determine and address the underlying root cause that is contributing to the volume of cost transfers and take necessary action to prevent unallowable costs from posting to the grant. We also recommend the University consider implementation of an automated control to ensure F&A is charged appropriately when cost transfer entries are made. Lastly, we recommend the University determine what additional Workday automated reporting is available to monitor compliance for personnel expenses, including effort verification reporting, F&A, etc. for activities allowed or unallowed and allowable costs/cost principles.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 003 Federal Program Title ? Research & Development Cluster Assistance Listing No. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Equipment/Real Property Management Criteria: As set forth in 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing audit procedures related to the accuracy and completeness of property records and physical inspection of the existence and safeguarding of fifty-seven equipment items (with a net book value of 628,232), the following conditions were identified: ? During our physical inspection procedures, which took several attempts, we noted thirty-five equipment items sampled (with a net book value of $583,715) that were not found at the location stated within the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table The property records for ten equipment items sampled (with a net book value of $327,266) did not have accurate property records (note some of these same equipment items were also not found at the location stated and were also included in the table above). Specifically, the serial number on the equipment item sampled was not documented in the fiscal year 2022 property records maintained by the University for the following items: See Schedule of Findings and Questioned Costs for chart/table ? The property records for two equipment items (with $0 net book value) sampled were not updated to reflect disposals made during fiscal year 2022. Management stated no proceeds were received for the following items: See Schedule of Findings and Questioned Costs for chart/table The University did not have an effective system of internal control in place to ensure property records accurately reflect equipment locations, equipment serial numbers, and disposals. As of June 30, 2022, the University was responsible for maintaining and safeguarding equipment purchased using federal awards with a net book value of $2,110,646. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that inadequate documentation of policies and procedures regarding the types of conditions that require communication to the Business and Finance office (e.g., when equipment is moved to a different location), as well as a lack of a review of changes made to property records by someone other than the preparer, contributed to multiple errors in the property records. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 003. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University strengthen policies, procedures and internal controls to ensure requirements around equipment/real property management are met. We recommend the University perform a detailed review of the property records and make corrections to accurately reflect the required information. We also recommend the University take a fresh look at their capital equipment recordkeeping policies and procedures and consider both preventive and detective internal controls to ensure property records accurately reflect the requirements of 2 CFR 200.313(d)(1).
Finding 2022 004 Federal Program Title ? Research & Development Cluster Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various Compliance Requirement ? Period of Performance Criteria: As set forth in 2 CFR Section 200.403, the University may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: While performing period of performance procedures specific to the population of grants with period ending dates during the University?s fiscal year ended June 30, 2022, we noted five grants (with expenditures totaling $9,335) of sixty sampled (with expenditures totaling $76,419) where the expenditure incurred date was after the end of the period of performance and expenditures were still being recorded that were incurred up to 120 days past the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table The periods of performance ended during fiscal year 2022 was one-hundred and five grants. Additionally, while performing period of performance procedures specific to adjustments (including cost transfers) made during the University?s fiscal year ended June 30, 2022, we noted nine cost transfers (totaling $27,865) of sixty sampled (totaling $3,153,441) where the expenditure incurred date was after the end of the period of performance for the following awards: See Schedule of Findings and Questioned Costs for chart/table Positive cost transfers of approximately $4,060,000 and negative cost transfers of $3,510,000 were made during the fiscal year ended June 30, 2022. The University did not have an effective system of internal control in place to ensure costs were not recorded to federal grants beyond the end date of the award?s period of performance. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated there was a missing automated control in Workday which would prevent expenditures from being charged to the grant after the period of performance end date. The lack of an automated control contributed to the noncompliance with the period of performance compliance requirement. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University take a fresh look at the existing policies, procedures and internal controls to ensure costs charged to federal awards are within the period of performance. We recommend the University consider implementing an automated control within Workday that prevents the recording/posting of transactions within a specified timeframe after the end of each grants period of performance. Additionally, we recommend the University consider its existing policies and processes around the automatic posting of payroll charges and consider additional internal controls that would prevent payroll charges from being charged beyond the end date of the award?s period of performance.
Finding 2022-005 Federal Program Title ? COVID-19 - Education Stabilization Fund - Higher Education Emergency Relief Fund ? Institutional Portion Assistance Listing No. ? 84.425F Federal Agency ? U.S. Department of Education ? Direct Program Federal Award Number ? Not applicable Grant Award Period ? April 22, 2020 through January 17, 2022 Compliance Requirement ? Reporting Criteria: As set forth in 34 CFR 75.720(b), all HEERF grantees must submit a Higher Education Emergency Relief Fund (HEERF) Annual Report. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure the HEERF Annual Report was reviewed by someone other than the preparer for completeness and accuracy prior to submission to the U.S. Department of Education. Questioned Cost: There are no questioned costs. Cause and Effect: The University did not have an effective system of internal control to ensure the required Annual Report submitted to the U.S. Department of Education was reviewed by someone other than the preparer for completeness and accuracy. The lack of a review by someone other than the preparer could result in information being reported that is materially inaccurate or incomplete. Repeat Finding: A similar finding regarding internal control was reported in prior year audits as finding numbers 2020-001 and 2021-005. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure the required reports are reviewed by someone other than the preparer for completeness and accuracy prior to being submitted to the U.S. Department of Education.
Finding 2022-005 Federal Program Title ? COVID-19 - Education Stabilization Fund - Higher Education Emergency Relief Fund ? Institutional Portion Assistance Listing No. ? 84.425F Federal Agency ? U.S. Department of Education ? Direct Program Federal Award Number ? Not applicable Grant Award Period ? April 22, 2020 through January 17, 2022 Compliance Requirement ? Reporting Criteria: As set forth in 34 CFR 75.720(b), all HEERF grantees must submit a Higher Education Emergency Relief Fund (HEERF) Annual Report. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure the HEERF Annual Report was reviewed by someone other than the preparer for completeness and accuracy prior to submission to the U.S. Department of Education. Questioned Cost: There are no questioned costs. Cause and Effect: The University did not have an effective system of internal control to ensure the required Annual Report submitted to the U.S. Department of Education was reviewed by someone other than the preparer for completeness and accuracy. The lack of a review by someone other than the preparer could result in information being reported that is materially inaccurate or incomplete. Repeat Finding: A similar finding regarding internal control was reported in prior year audits as finding numbers 2020-001 and 2021-005. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure the required reports are reviewed by someone other than the preparer for completeness and accuracy prior to being submitted to the U.S. Department of Education.
Finding 2022-005 Federal Program Title ? COVID-19 - Education Stabilization Fund - Higher Education Emergency Relief Fund ? Institutional Portion Assistance Listing No. ? 84.425F Federal Agency ? U.S. Department of Education ? Direct Program Federal Award Number ? Not applicable Grant Award Period ? April 22, 2020 through January 17, 2022 Compliance Requirement ? Reporting Criteria: As set forth in 34 CFR 75.720(b), all HEERF grantees must submit a Higher Education Emergency Relief Fund (HEERF) Annual Report. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure the HEERF Annual Report was reviewed by someone other than the preparer for completeness and accuracy prior to submission to the U.S. Department of Education. Questioned Cost: There are no questioned costs. Cause and Effect: The University did not have an effective system of internal control to ensure the required Annual Report submitted to the U.S. Department of Education was reviewed by someone other than the preparer for completeness and accuracy. The lack of a review by someone other than the preparer could result in information being reported that is materially inaccurate or incomplete. Repeat Finding: A similar finding regarding internal control was reported in prior year audits as finding numbers 2020-001 and 2021-005. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure the required reports are reviewed by someone other than the preparer for completeness and accuracy prior to being submitted to the U.S. Department of Education.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 012 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Number ? 1 U3SHS42192-01-00 Grant Award Period ? June 1, 2021 to August 31, 2022 Compliance Requirement ? Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, referred as the ?Transparency Act? that are codified in 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure that all required reports were submitted. While performing testwork over FFATA reporting for four of seven subrecipients, it was identified that FFATA reporting was not completed during fiscal year 2022 for two of the eight first tier subawards of $30,000 or more. See Schedule of Findings and Questioned Costs for chart/table Questioned Costs: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of a management review control that operated effectively over FFATA reporting for subawards greater than $30,000 contributed to the noncompliance with the Reporting compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University submit the 2 additional required FFATA reports. Additionally, we recommend the University strengthen its processes and internal controls to ensure the University has both preventive and detective internal controls in place to ensure that reports for first tier subawards of $30,000 or more are reported to the FSRS as required.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 012 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Number ? 1 U3SHS42192-01-00 Grant Award Period ? June 1, 2021 to August 31, 2022 Compliance Requirement ? Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, referred as the ?Transparency Act? that are codified in 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure that all required reports were submitted. While performing testwork over FFATA reporting for four of seven subrecipients, it was identified that FFATA reporting was not completed during fiscal year 2022 for two of the eight first tier subawards of $30,000 or more. See Schedule of Findings and Questioned Costs for chart/table Questioned Costs: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of a management review control that operated effectively over FFATA reporting for subawards greater than $30,000 contributed to the noncompliance with the Reporting compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University submit the 2 additional required FFATA reports. Additionally, we recommend the University strengthen its processes and internal controls to ensure the University has both preventive and detective internal controls in place to ensure that reports for first tier subawards of $30,000 or more are reported to the FSRS as required.
Federal Program Titles ? Research & Development Cluster and COVID 19 National Organizations of State and Local Officials Assistance Listing Nos. ? As listed on the Schedule of Expenditures of Federal Awards for R&D Cluster 93.011 ? COVID 19 National Organizations of State and Local Officials Federal Agencies ? U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Interior, U.S. Department of Justice, Department of State, U.S. Department of Transportation, National Aeronautics and Space Administration, National Endowment for the Humanities, National Science Foundation, U.S. Department of Veterans Affairs, U.S. Department of Energy, U.S. Department of Education, and U.S. Department of Health and Human Services Federal Award Numbers ? As listed on the Schedule of Expenditures of Federal Awards Grant Award Periods ? Various for Research & Development Cluster and June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, for COVID 19 National Organizations of State and Local Officials Compliance Requirements ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: According to 2 CFR 200.419, a higher education entity that receives an aggregate total of $50 million or more in Federal awards must disclose their cost accounting practices by filing a Disclosure Statement (DS 2). An accurate DS 2 must be maintained and the higher education entity must comply with the cost accounting practices established within the DS 2. Amendments to the DS 2 must be filed with the cognizant agency for indirect costs in advance of a disclosed practice being changed to comply with a new or modified standard, or when a practice is changed for other reasons. Amendments of a DS 2 may be submitted at any time. Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University?s last submitted DS 2 to the U.S. Department of Health & Human Services was March 27, 2007. The University implemented significant portions of Workday on July 1, 2020. We noted multiple items in the existing DS 2 that are no longer applicable/accurate and/or refers to previous practices and policies, including those related to the University?s salary and wage accumulation system. The University did not have an effective system of internal control in place to ensure compliance with the requirements for amending its DS 2. Questioned Cost: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that capacity issues resulted in the a revised DS 2 not being prepared and submitted. Repeat Finding: A similar finding was reported in prior year audit as finding number 2021 002. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure requirements around the DS 2 are met. We recommend the University perform a thorough review of their existing DS 2 and determine what adjustments to the existing D2-2 are needed to reflect current policies and practices. Additionally, we recommend the University implement a process to routinely review the DS 2 so that any updates are submitted as required. Lastly, we recommend someone other than the preparer perform a review of the DS 2 prior to any amendments being submitted.
Finding 2022 011 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Numbers ? 1 U3SHS42192-01-00 and 1 G32HS42670-01-00 Grant Award Periods ? June 1, 2021 to August 31, 2022 and July 31, 2021 to October 31, 2022, respectively Compliance Requirement ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.430 includes the standards for documentation of personnel expenses. According to 2 CFR 200.430(i)(1), charges to federal awards for salary and wages must be based on records that accurately reflect the work performed. Among other requirements within 2 CFR 200.430(i)(1), section (i) states records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and section (v) states that the records must comply with established accounting policies and practices. Additionally, the HHS Grants Policy for educational institutions requires a plan confirmation system (system) for professorial and other professional staff members that is based on budgeted, planned, or assigned work activity and that is updated to reflect any significant changes in work distribution. The system must be incorporated into the organization?s official records and must identify activity applicable to each sponsored agreement and to each category needed to identify indirect costs and the functions to which they are allocable. At least annually, the employee, principal investigator, or responsible official will verify, by suitable means, that the work was performed and that the salaries and wages charged to sponsored agreements, whether as direct charges or in other categories of cost, are reasonable in relation to the work performed. A system, supported by after-the-fact activity reports, that reflects the distribution of covered employees? activity allocable to each grant and includes identification and recording of significant changes in work activity when initial charges were based on estimates. For professorial and other professional staff members, the activity reports will be prepared each academic term, but at least every 6 months. The University did not follow their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not adhere to the HHS Grants Policy which requires after-the-fact activity reports. Additionally, the University did not adhere to their `Effort Reporting Policy? which states ?Subjects must return the certified effort verification report no later than 30 calendar days after they have been distributed.? We noted two of our fourteen sampled effort verification reports that were noncompliant. One effort verification report was not certified as the employee resigned and an effort verification report was not initiated as part of their exit procedures. Additionally, the employee?s supervisor also resigned. Lastly, one effort verification report was not certified within the 30-calendar day policy. Total payroll and fringe totaled approximately $320,000 during fiscal year 2022. The University did not have an effective system of internal control in place to ensure compliance with activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Questioned Cost: Questioned costs are not determinable. Cause and Effect: In discussing these conditions with University management, they stated that there was a missing management review control to prevent noncompliance specific to the timeliness of the certifications of effort reports contributed to the noncompliance with the activities allowed/unallowed and allowable costs/cost principles specific to effort reporting. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place to ensure that certification of effort reports complies with both federal requirements and University policy. Additionally, we recommend the University take a fresh look at policies and procedures in place when an employee resigns to consider whether exit procedures should include the initiation and certification of an effort verification report prior to departure.
Finding 2022 012 Federal Program Title ? COVID-19 - National Organizations of State and Local Officials Assistance Listing No. ? 93.011 Federal Agency ? U.S. Department of Health and Human Services Federal Award Number ? 1 U3SHS42192-01-00 Grant Award Period ? June 1, 2021 to August 31, 2022 Compliance Requirement ? Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, referred as the ?Transparency Act? that are codified in 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: The University did not have an effective system of internal control in place to ensure that all required reports were submitted. While performing testwork over FFATA reporting for four of seven subrecipients, it was identified that FFATA reporting was not completed during fiscal year 2022 for two of the eight first tier subawards of $30,000 or more. See Schedule of Findings and Questioned Costs for chart/table Questioned Costs: There are no questioned costs. Cause and Effect: In discussing these conditions with University management, they stated that a lack of a management review control that operated effectively over FFATA reporting for subawards greater than $30,000 contributed to the noncompliance with the Reporting compliance requirement. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University submit the 2 additional required FFATA reports. Additionally, we recommend the University strengthen its processes and internal controls to ensure the University has both preventive and detective internal controls in place to ensure that reports for first tier subawards of $30,000 or more are reported to the FSRS as required.
Finding 2022 006 Federal Program Title ? COVID-19 ? Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing No. ? 93.498 Federal Agencies ? U.S. Department of Health and Human Services Federal Award Number ? Not applicable Grant Award Period ? January 1, 2020 to June 30, 2022 Compliance Requirement ? Reporting Criteria: Under the terms and conditions of the award, Provider Relief Funds (PRF) is subject to 45 CFR Section 75.302 (Financial management and standards for financial management systems). The PRF program requires special reporting through the Provider Relief Fund Reporting Portal and the PRF period 3 report contains key line items. Key line items, when calculating lost revenues based on 2019 actuals, consist of the following which are required to be completely and accurately reported: 1) Total revenue/net charges for each quarter; and 2) Each cell by payer for each quarter (i.e., Medicare A+B, Medicare C, Children?s Health Insurance Program/CHIP, Commercial Insurance, Self-Pay, and Other). Additionally, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Conditions Found: During our testing for the reporting compliance requirement, the following conditions were identified: ? Total revenue/net charges from patient care attributable to quarter two (Q2) 2021 actuals for Self-Pay (No Insurance) was understated by $2,000,000. Total revenue/net charges from patient care attributable to Q2 2021 actuals for Self-Pay (No Insurance) per the PRF period 3 report noted $3,758,128 and the supporting documentation provided by the University reported $5,758,128. This $2,000,000 error occurred in a quarter that did not result in lost revenue. ? The period 3 report which included actuals for calendar years 2019 through 2021, reported $6,754,185 as Commercial Insurance which included "Charge Corrections" made by the University. The Charge Corrections represented corrections made across all payer categories but the entire amount was reported within Commercial Insurance. As a result, the amounts reported for the Commercial Insurance payer category was overstated for each of the quarters in calendar years 2019 through 2021 and all other payer categories were understated for each of the quarters. ? For Q3 2021 and Q4 2021, the PRF period 3 report included allocations of "Charge Corrections" and a reclassification made by the University in the amount of $6,177,240. The Charge Corrections and the reclassification impacted three payer categories: Medicaid/Children?s Health Insurance Program of $4,533,665; Medicare A+B of $1,000,000; and Other of $643,575. ? For Q1 2022 and Q2 2022, the PRF period 3 report included $61,431 for the Commercial Insurance payer category than what was supported by the detail and the Other payer category included $61,431 less than what was supported by the detail. The University did not have an effective system of internal control in place to ensure that key line items within the PRF period 3 report were complete and accurate. Questioned Cost: There are no questioned costs as the University had excess lost revenues greater than their period 3 PRF award. Cause and Effect: In discussing these conditions with University management, they stated that an effective system of internal controls to ensure the completeness and accuracy of amounts reported within the period 3 PRF report did not exist and resulted in certain key line items as listed above being inaccurate. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University enhance its internal control process to ensure the University has effective internal controls in place that includes a review of all amounts, including all key line items, allocations and reclassifications within the PRF report to determine completeness and accuracy before submission into the portal.